Books to Get You Thinking
The subject of taxes invariably becomes a topic of contentious debate generating conflicting views on the rates and structure of the tax code as well as on levels of government expenditure. Centuries ago, Benjamin Franklin observed “In this world, nothing can be said to be certain, except death and taxes.” However early America—except for excise taxes on some commodities—had no direct income taxation and it was only in 1861 that the Revenue Act was introduced to finance the Civil War. Over the years, the complexity of the tax code and the tax base have grown steadily with taxes currently accounting for almost a fourth of the country’s total gross domestic product. What is the role of tax policy in an economy? What are the macroeconomic consequences of changes in the structure of taxes and overall government expenditure? How has the system worked and evolved in the US? Answers to many such questions can be found in Mercer County Library System’s rich collection of books on this subject!
Taxes In America: What Everyone Needs to Know by Leonard Burman and Joel Slemrod
Leonard Burman, Professor of Public Affairs at Syracuse University and Joel Slemrod, Professor at the Ross Business School of the University of Michigan, seek to provide readers with a lucid, incisive analysis of the intricacies of the tax system, while dispelling some of the more common misperceptions that people have about taxes. The book is arranged in a question and answer format, the explanations being provided in simple everyday terms with an absence of technical jargon. The writing is comprised of three distinct parts: the first part highlights the different types of taxes in the US including personal income, corporate and estate taxes, as well as taxes on consumption and spending; the second part explains both the macro- and microeconomic policy implications of the tax structure through its influence on economic decisions on consumption and savings levels; and the third part is a balanced analysis of some controversial subjects such as the efficacy of a progressive system of taxes, how taxes are distributed and what makes a tax system fair. If tax cuts are financed with borrowed money, then one school of thought claims that negative effects on future deficit levels could be avoided through the resultant higher economic growth. However, statistical analysis fails to support the validity of this argument. The final part of the book concludes with the politics underlying the system of taxes in place and the direction of future reforms.
We Are Better Than This: How Government Should Spend Our Money by Edward Kleinbard
Professor of Law and Business at the University of Southern California Edward Kleinbard also served as Chief of Staff of the Congressional Joint Committee on Taxation. The book focuses on the much-debated question of the role that federal government should play in an economy. The author looks at two different facets of fiscal policy. The first focuses on the philosophical underpinnings of progressive taxation as well as expenditure in industries where market profits fail to provide incentives for attracting adequate levels of private investment. These are areas such as infrastructure, health, and education. Kleinbard makes a strong economic case for government to step in with investment in these sectors of the economy funded largely through taxes. Such investments do not conflict with but rather play a complementary role to the private sector.
The second part of the author’s analysis of fiscal policy focuses on the actual working and effects of the fiscal policy machine in the US. Kleinbard examines the US tax code, including the prevalent system of subsidies and tax breaks that affects the actual incidence of taxes on corporate income and marginal tax rates influencing incremental investment decisions. Using extensive OECD comparative data, Kleinbard also examines government defense expenditures and programs like Medicare and Social Security, comparing these with similar programs designed and operating in other OECD countries. Statistically, the US has the lowest figure of taxes as a percentage of GDP in a comparison with other OECD member nations even after taking account the higher taxes imposed in 2013. Yet government expenditure in the US finances a military as big as that of all other OECD countries combined, along with the most expensive and inefficient healthcare system in the world. Kleinbard also examines data to present a fascinating analysis of how US economic performance has shown better results during years of high tax rates. Similarly, countries with higher taxes are also seen performing better than US today.
A Fine Mess: A Global Quest for a Simpler, Fairer and More Efficient Tax System by T.R. Reid
A long time correspondent for the Washington Post, T. R. Reid does an in-depth study of the tax system in the United States, pointing to its shortcomings and looking for solutions for the future by examining the tax codes of countries in the European Union, as well as others including Japan and New Zealand. Income taxes levied at the federal and state levels along with local levies account for more than a quarter of the total US GDP. The system has become overly complex and inefficient, negatively affecting the overall levels of revenue generated. The proliferation of deductions, tax breaks, and subsidies makes the system difficult for taxpayers to comprehend and undermines the spirit of voluntary payment and tax compliance. In 2015, American taxpayers spent six billion hours preparing and filing tax returns while spending $10.1 billion as fees to tax preparers and $2 billion on tax software programs. The present regime of taxes also encourages tax evasion by corporations through taking advantage of built-in tax loopholes. Corporations are able to shift operations abroad to evade paying millions in revenue to the US government. Reid offers an innovative blueprint for redesigning the American tax code, the heart of which revolves around levying the value added tax—a tax on consumption rather than on income that is widely used all over the world as it is simple to enforce and successfully generates revenue. This could include a financial activities tax on the high volume of securities trading that happens every day. Reid further advocates a simplification of the tax code by removing all deductions and exemptions along with simultaneous tax rate cuts for everyone including corporations.
Leonard Burman, Professor of Public Affairs at Syracuse University and Joel Slemrod, Professor at the Ross Business School of the University of Michigan, seek to provide readers with a lucid, incisive analysis of the intricacies of the tax system, while dispelling some of the more common misperceptions that people have about taxes. The book is arranged in a question and answer format, the explanations being provided in simple everyday terms with an absence of technical jargon. The writing is comprised of three distinct parts: the first part highlights the different types of taxes in the US including personal income, corporate and estate taxes, as well as taxes on consumption and spending; the second part explains both the macro- and microeconomic policy implications of the tax structure through its influence on economic decisions on consumption and savings levels; and the third part is a balanced analysis of some controversial subjects such as the efficacy of a progressive system of taxes, how taxes are distributed and what makes a tax system fair. If tax cuts are financed with borrowed money, then one school of thought claims that negative effects on future deficit levels could be avoided through the resultant higher economic growth. However, statistical analysis fails to support the validity of this argument. The final part of the book concludes with the politics underlying the system of taxes in place and the direction of future reforms.
Professor of Law and Business at the University of Southern California Edward Kleinbard also served as Chief of Staff of the Congressional Joint Committee on Taxation. The book focuses on the much-debated question of the role that federal government should play in an economy. The author looks at two different facets of fiscal policy. The first focuses on the philosophical underpinnings of progressive taxation as well as expenditure in industries where market profits fail to provide incentives for attracting adequate levels of private investment. These are areas such as infrastructure, health, and education. Kleinbard makes a strong economic case for government to step in with investment in these sectors of the economy funded largely through taxes. Such investments do not conflict with but rather play a complementary role to the private sector.
The second part of the author’s analysis of fiscal policy focuses on the actual working and effects of the fiscal policy machine in the US. Kleinbard examines the US tax code, including the prevalent system of subsidies and tax breaks that affects the actual incidence of taxes on corporate income and marginal tax rates influencing incremental investment decisions. Using extensive OECD comparative data, Kleinbard also examines government defense expenditures and programs like Medicare and Social Security, comparing these with similar programs designed and operating in other OECD countries. Statistically, the US has the lowest figure of taxes as a percentage of GDP in a comparison with other OECD member nations even after taking account the higher taxes imposed in 2013. Yet government expenditure in the US finances a military as big as that of all other OECD countries combined, along with the most expensive and inefficient healthcare system in the world. Kleinbard also examines data to present a fascinating analysis of how US economic performance has shown better results during years of high tax rates. Similarly, countries with higher taxes are also seen performing better than US today.
A long time correspondent for the Washington Post, T. R. Reid does an in-depth study of the tax system in the United States, pointing to its shortcomings and looking for solutions for the future by examining the tax codes of countries in the European Union, as well as others including Japan and New Zealand. Income taxes levied at the federal and state levels along with local levies account for more than a quarter of the total US GDP. The system has become overly complex and inefficient, negatively affecting the overall levels of revenue generated. The proliferation of deductions, tax breaks, and subsidies makes the system difficult for taxpayers to comprehend and undermines the spirit of voluntary payment and tax compliance. In 2015, American taxpayers spent six billion hours preparing and filing tax returns while spending $10.1 billion as fees to tax preparers and $2 billion on tax software programs. The present regime of taxes also encourages tax evasion by corporations through taking advantage of built-in tax loopholes. Corporations are able to shift operations abroad to evade paying millions in revenue to the US government. Reid offers an innovative blueprint for redesigning the American tax code, the heart of which revolves around levying the value added tax—a tax on consumption rather than on income that is widely used all over the world as it is simple to enforce and successfully generates revenue. This could include a financial activities tax on the high volume of securities trading that happens every day. Reid further advocates a simplification of the tax code by removing all deductions and exemptions along with simultaneous tax rate cuts for everyone including corporations.
—Nita Mathur
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